Cisco On Its NFV Strategy: 'No One Else Comes Close'

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Cisco's launch of ESP comes as the networking giant struggles to regain growth in its service provider business. For its second fiscal quarter, ending Jan. 25, Cisco said product orders in its service provider segment were down 12 percent year-over-year. In the previous quarter, Cisco's service provider business was down 13 percent year-over-year.

Ahuja said service provider customers including China Mobile, Deutsche Telekom, SunGard and Telecom Italia have already stepped forward to endorse ESP, and that, since the announcement, "many others" have expressed an interest.

According to Akshay Sharma, research director at Gartner, the NFV market is still in its early stages. But he said more and more carriers are likely to embrace NFV over the coming year as a way to protect their subscriber bases from over-the-top (OTT) rivals like Google and Skype.

"I think the cat is out of the bag," Sharma said. "For telcos, their biggest fear factor is being a bit pipe to the over-the-tops, like Google Voice, Skype, Hulu and Netflix. The over-the-top guys have already embraced the cloud. They are innovating. So part of this is also really a telco initiative."

Sharma said Cisco's biggest strength in the NFV market is its "end-to-end" service provider story, ranging from carrier-grade routing to SDN service orchestration. That said, Cisco still needs to build out its portfolio in other areas like Voice over LTE, where, Sharma said, rivals like Alcatel, Erickson and Nokia excel.

Sudhir Verma, Chief Technology Officer at Force 3, a Crofton, Md.-based solution provider and Cisco partner, said that, given the heavy carrier focus around NFV, Cisco's ESP launch won't have a significant impact on its channel -- at least not yet.

"At the moment there is not much play for typically channel VARs," Verma wrote in an email to CRN. "However, as the use cases for SDN expand, and start to spill over to enterprise networking, it will be an opportunity for VARs to beef up their solution delivery capabilities around SDN. The true differentiation will move away from price/line card to true consultative services and expertise around SDN."

While NFV is still in its early days, Gartner's Sharma said it's definitely a market that networking vendors like Cisco need to attack. The pressure for these vendors to make a move, he said, is intensified by the fact that those over-the-top companies like Google and Facebook have embraced cheaper, whitebox alternatives to proprietary networking hardware on their journey to virtualization and the cloud.

"Everyone can say they are a leader at this point, because it's still new," Sharma said of the rush of NFV announcements this week. "But I think everyone has a different twist to the equation and they are all leveraging the strengths that they have."